Social Security Arrangements and Early-Stage Entrepreneurial Activity

32 Pages Posted: 13 Aug 2007 Last revised: 9 May 2008

See all articles by Jolanda Hessels

Jolanda Hessels

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Andre J. van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Peter Brouwer

TNO Quality of Life - Work and Employment

S. Wennekers

EIM Netherlands - Business and Policy Research

Abstract

This exploratory study defines a number of propositions regarding the relation between social security arrangements and the rate of early-stage entrepreneurial activity at the country level. We state that in investigating this relation it may be relevant to distinguish between social security contributions paid by employers and employees, and to look at micro-based indicators (replacement rates) for the benefits an individual is entitled to in case of unemployment and illness. Furthermore, we state that it may be especially relevant to focus on the social security position of self-employed relative to the social security position of employees. Using a sample of countries participating in the Global Entrepreneurship Monitor, we explore how various measures of entrepreneurial activity are related to various measures of social security arrangements. Our analysis using aggregate indicators shows that the height of employer social security contributions negatively influences entrepreneurial activity at the macro level, but that the height of employee contributions has no impact. The results of our analysis using micro-level based indicators suggest that the replacement rate of employees has a significantly negative influence on the level of early-stage entrepreneurship at the macro level.

Keywords: social security, replacement rates, entrepreneurship, institutional economics

Suggested Citation

Hessels, Jolanda and van Stel, Andre J. and Brouwer, Peter and Wennekers, Sander, Social Security Arrangements and Early-Stage Entrepreneurial Activity. Comparative Labor Law & Policy Journal, Vol. 28, No. 4, 2007. Available at SSRN: https://ssrn.com/abstract=1006256

Jolanda Hessels (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Andre J. Van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Peter Brouwer

TNO Quality of Life - Work and Employment ( email )

Polarisavenue 151
Postbus 718
Hoofdorp, 2130 AS
Netherlands

HOME PAGE: http://www.tno.nl

Sander Wennekers

EIM Netherlands - Business and Policy Research ( email )

Postbus 7001
2701 AA Zoetermeer
Netherlands
31 79 3413634 (Phone)

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